Head in the Cloud

Gaikai CEO David Perry on the rise and rise of cloud gaming

David Perry is co-founder and CEO of cloud gaming platform Gaikai. The service allows publishers to make their games available to any gamer on any machine, as recently demonstrated by the EA demos of Mass Effect 2 and Dead Space on retailer Walmart's site.

Ahead of his appearance at Cloud Gaming USA, Perry spoke exclusively to GamesIndustry.biz about the success the company has had so far, the plans for the future, and about why he thinks Apple poses a bigger threat to consoles than cloud gaming ever could.

Q:Since we last spoke to you at E3, you've launched the Walmart partnership. Have you seen any results from that yet?

David Perry:
Really good. We have this really weird situation we found ourselves in where the only way you can place your video game on a retailer's website is through us. We found ourselves at the right place at the right moment because that's very interesting to retailers, so we've been doing a lot of work with different retailers, getting them ready for launch as well. It's going to be a very interesting next 6 months, because you don't want to be the retailer that doesn't have video games on your site if you think about it. If the others do it and you don't that's not so good. So we're trying to work that out, right now I have to say it's keeping us insanely busy trying to keep up with it.

Starting with Walmart, being the number one retailer in the world, that's helped a lot. That's definitely helped a lot. There's a lot more games that will keep popping up on Walmart. We have a new server you see that hasn't been released yet, it's actually working in closed beta test, but very soon that new server is going to be turned on and you'll see those new games appearing on Walmart.

Q:So we can get expect to see the service popping up on all the retail sites then?

David Perry:
Yep, including Europe too.

Q:You've signed up Capcom and EA as partners so far, how are the talks with other publishers going?

David Perry:
I would say almost all of the major publishers are actually in contracts with us right now, so we're making very good progress with them. Again it's a strange situation, it's kind of surprising but the only way you can place your videogame on your own website is through us, there's no other way to do it.

I keep getting asked "will you come and sponsor this, will you do this marketing thing" and I'm like I really don't need any more business right now. We're having a hell of a time trying to keep up with the current agreements we're trying to scale. We have 3 different attorney firms working for us just on agreements right now, so it's been very difficult to handle it all. But it's coming along very nicely. The core is the important thing which is people want to be able to put the games where their gamers are and so Gaikai is the only way to do that right now.

I would say almost all of the major publishers are actually in contracts with us right now.

Q:So have you planned which Ferrari you're going to buy?

David Perry:
It's a tough one because this is a VC backed company and the way that works is the money that you raise and the money that the company makes goes to grow the value of the company. I've been on the other side of it where it's your company but this is me running a large company with very large investors investing into it. My point is that the challenge here is to grow the value of the company for everyone, and that's a fun situation. The companies that we have backing us are some of the highest, most respected VCs in Silicon Valley.

Q:When you talk to publishers what are the concerns they have about using Gaikai? Are there any obstacles?

David Perry:
There is one obstacle which is that we want to be able to serve 100 per cent of people, and this is something we realised over a year ago, we realised that there was this problem with we wanted to have 100 per cent, and the only way to get to 100 per cent is that there's some people that don't have a good internet connection or that are too far away from our servers. We have to have a solution for them too. So we built a second technology to pick up those people and it gets the game running as fast as possible for them. So the thing that we're trying to really solve in the game industry is discovering something true to playing it or having it delivered to your computer and Gaikai is the fastest way to do that. And that is something that is also in closed beta right now. So that you'll get to see pretty soon. The concept there is just insanely fast downloads from your browser, your web browser delivering games to the user.

We did that for two reasons. One is that we wanted to be able to let everybody play, and number two is if somebody decides to buy the game or download the MMO, we have to have the fastest way to get it to them. And that's what we've built.

Q:You've mentioned in the past that data centres are really key?

David Perry:
It's a bigger concept actually, the long tail for business? And most of the stuff down the long tail is the old stuff or the stuff that didn't sell too well, and then you've got the stuff at the high end of the tail where all the business is happening. In this kind of space that's where we're focussed. We're focussed on the piece of the curve where all the action is. So that's very much forced us to think about how to get the fastest streaming possible, so then you get into to a whole discussion of how technically to do that. The farther things have to travel, and the more equipment they have to travel through, the slower the connection. So every time you press the fire key or the jump key, if that key has to cross maybe two states to a server and then come back two states with the answer, then that's four states are being crossed every single time you press the jump key. And that's pretty painful mathematically. So we found that by moving the server two states closer it's actually the equivalent of moving it four states closer, and that's a big deal.

So we've really put a huge amount of energy into that, and we actually just signed a new hosting agreement to add even more data centres, so to some extent we're almost spreading virally across data centres. And the idea being that whenever people play they'll have insanely fast connection times. I just did a demonstration yesterday for a publisher and we had a one and half millisecond ping. So a one and half millisecond round trip from their office to our data centre, and that's so small, a thousandth of a second. We're talking about such small amounts of time that it becomes irrelevant. So that's what we're trying to get to, that some day for all gamers, not necessarily one and a half milliseconds because that's incredible, but such small pings that it just doesn't matter.

Q:That seems to be people's main concern about cloud gaming, that they can't play twitchy stuff.

David Perry:
In our office we have Street Fighter running at 60 fps, multiplayer. So there's no question that it can be done. The thing that people didn't realise, I mean it sounds challenging but if you think about it we have currently 75 people who come into the office every day, working on all kinds of technology and solutions to try and make this feel even better. And we have a road map still, of many ideas to keep implementing that will shave off another millisecond here, another millisecond there, and it's that relentless pursuit of it that makes the whole thing a little more interesting. I have no question that in a few years time it'll start to feel like the games are in the room.

We don't think we're a threat to console. I think the threat to consoles is actually Apple.

Q:Have you had any discussions with publishers that also make consoles? Do they consider you a threat?

David Perry:
We don't think we're a threat to console. I think the threat to consoles is actually Apple. I think the concern there is that they're generating hardware so quickly now. If you're creating and shipping new hardware every 12 months, and during that 12 months you're also giving pretty impressive upgrades, the features that people want, and you're giving them those every 6 months and hardware every 12 months, I think the idea that you would have five to seven years on hardware refreshes is becoming a technical problem. So I honestly don't think we're a challenge at all for the consoles, I just think the consoles are different. The world is changing.

Another example of that is the handhelds. I think the handhelds are getting challenged very aggressively by the mobile phones. I find myself spending a lot of money on iPhone, and if you look at a handheld today, the one's that people keep making, they still make them as a gaming machine – I was at a speech and there was this guy, Ken Robinson, and he asked how many people in the audience wear wristwatches, and he said when you talk to younger kids today, most of them don't have wristwatches, and the reason is they only do one thing. And they don't want to carry anything that just does one thing. They carry their phone and it does everything. And so if you make single function devices, then you've got a problem. That's my concern for handhelds, is this single function side of it.

Consoles are trying to change as quickly as they can to become entertainment devices, and everyone is saying "you can play your music on it" and "you can watch movies on it" and that entertainment device strategy is the way to save consoles. For handhelds that's a really hard thing to do. I know they're adding Netflix and stuff, but they really need to be that sort of multifunction device to survive. And if you think about it, that ultimately turns them into cellphones. So I don't think cloud gaming is their problem.

I mean I just find myself impulse purchasing because they keep the prices down. If the iPhone games were $60 each, or £60 in the UK? So Imagine your iPhone games were £60 each, you'd be hesitating all the time. But when it's £2 or whatever then you're like "OK" and you click on it, and now that microtransactions have kicked in, there's a game I've recently spent $90 on, there's another game I spent $70 on. And I'm a big fan of that idea, you only pay for the games you love. So you fall in love with a game, and you spend a bunch of money in it, no harm no foul.

Q:At E3 you also mentioned hitting ten million users by autumn, are you still on track for that?

David Perry:
I think we're almost already there, we're getting very close already, so we'll definitely make our ten million mark. But our objective is obviously to grow to having a very, very wide range. What our objective was when we first explained it to publishers is we want them to be able to reach as many people as they need to as quickly as they need to. So if they say they want a million people to play their game they can pull a lever and we can make that happen immediately.

To do that we have to have an awful lot of traffic, and the way to get the traffic is to embed into lots and lots of sites, and the retailer sites as well. So that's just been an ongoing things. Again, once you start to see the announcements, you'll see why the math all adds up.

Q:Users can instantly access a great, high quality demo on very basic hardware - that's the USP of Gaikai. But beyond that, the consumer can't buy and play a game like Crysis 2 at home cos they still have that basic hardware. How do you address that problem - users can play a demo but not the actual full game?

David Perry:
That's probably the biggest misunderstanding of what Gaikai is. We have built a global network that allows all this stuff to happen, think of it as building a cellphone network, and we've paid to put all the transmitters up and we've paid to create this whole network. So to make your phonecalls you don't want to have to buy a whole network right? That's the kind of position with the publishers, this already exists, this capability now, you don't really want to have to go and build all this technology and build a whole global network just for your games. It already exists, you can utilise it now, and you can put demos on your website, but don't think of it as just demos, demos is what we give you now because that's the easy thing to start with, but it's just a network.

The network capability is there, so it's up to the publishers to decide their individual use of it.

Think of it as a network, not as just a demo service. If you want to have a continued relationship with that user, say they're playing on the Mac right now and you don't even have a Mac version of the game, then it's up to you to the publishers to continue that relationship with that user. You still use our network to let them play, you bill them, and you set your pricing and you have your relationship with them and you offer them special discounts, whatever you want. That whole billing and relationship is yours, but whenever they log in the stream comes from our network. The network capability is there, so it's up to the publishers to decide their individual use of it. Some publishers will just say to us I only want computers that are capable of playing this one game to play. And we have no problem with doing that which means you will not be able to play the demo on the Mac. They decide that when they first sign the deal with us, they determine for the products what they want to do.

There's nothing to stop people doing it, we've done all kinds of long term passes, there's no typical limitation for this that you can only do it for 30 minutes or something, you can do it for hours on end, and you can do it for any device. That's out relationship with the publishers, you tell us what you to achieve. I want to be very clear that we are a service for them, we are not trying to compete for their customers, and that's a very big difference.

Q:Are many publishers looking to introduce the full game streaming yet?

David Perry:
It's funny that you've already taken that mental step forward, and that's exactly what the publishers do. They start going "OK, that would be great to put my games on my site" but then the next question is "well hold on a minute, now I've got somebody interested on the Mac and I don't have a Mac SKU to sell them, what to do we do next?" And that's the answer. I think it's a step that all publishers are going to have to make the decision, do you want to have a relationship with Mac users or not? Considering they haven't had to rebuild the game for Mac, I think it seems like a pretty good idea.

So that's what we built it for. I think it's a really cool tool that the publishers now have that they just didn't have before.

And the thing is it works on anything, so you're absolutely right, what if your laptop can't play this game but you want to? Therefore that's your answer - streaming long term for publishers is the way to go.

Q:We've seen Gaikai running World Of Warcraft on the iPad...

David Perry:
I know, it's incredible. We're also running it at full quality. The server that runs the games, whatever the game is, is a very high-end server. It's not like we're even having to compromise, you're getting an incredible experience. That's what I love about it, the whole idea of cloud gaming is like it's a window on another world, you're remote viewing on some machine you don't want to have to buy. I think the best analogy is the arcade machine, where you wanted to experience games you couldn't have at home. And you were willing to pay for the time that you played that game on that amazing machine. That's kind of what we're looking for long term here, so the experience you're getting is more often better than the experience than the machine you're on can play. So if you're at your office, and your company doesn't buy you the best computer in the world, then that's where cloud gaming could be actually kind of cool.

I think the best analogy is the arcade machine, where you wanted to experience games you couldn't have at home.

I have a laptop, it's totally lame quite frankly,it certainly could never run a Crysis in a million years, and yet I've run demonstrations on it of Crysis and all different other kinds of games. We have Crysis running at 60fps which is incredible.

Q:What's the next big milestone for Gaikai?

David Perry:
The thing that I'm excited about is releasing our Server 2 into the wild. So Server 1 is already out there, but Server 2 is in closed beta testing and the results have been great. This is all new, so it's not like you can just define "we'll do this, that and the other" and as you're testing you always discover things, so we take what we learn, we go back and we do another test, and another test and another test until we're ready.

I think that when people see that Server 2 running on their computers, I mostly think they're going to be shocked and like "oh my god, this stuff is really real." They'll be playing Crysis 2 and games like that.

And I just ordered a lot of them for Europe, they're being built right now. All our founders are European so Europe doesn't take a back seat role with us at all. So everything that we do Europe will be right up there day and date with the US, and that's very important to us. I've made the order, so when those servers go live it'll give everyone the chance to see.

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I suspect he's right that portable consoles need to become multi-function devices, as smartphones are, in order to stay successful. I think he's wrong that they're not doing so. Even now I use my PSP Go not only for games but for portable music, podcasts (downloaded with the built-in RSS feed follower), TV shows (recorded with torne on my PS3), and the odd bit of web browsing. I've been putting off buying an Android phone because I'm hoping the Vita will do most of what I want from a smartphone anyway, and if I'm going to be carrying that around I'd like to keep my smaller phone.

And I'm not a kid (I'm in my 40s), but I've not worn a watch in years, since I got a mobile phone that told me the time.

At first I wondered if this guy did a few lines of coke before the interview, that's not a joke by the way. And less than halfway through he's devolved into Dilbert's boss. At some point I think even he lost what the heck he was talking about. This may be one of the emptiest, most worthless interviews I've ever read. Not that I blame the interviewer, whoever you are. If I were Gaiki's PR head I'd keep this guy out of the limelight.

Right about cellphones and handhelds... Right about Apple.... Right about watches... Wrong about cloud technology.

He forgets that he doesn't own the network, only the servers. Unless fair use polices are significantly increased or abolished altogether cloud technology will be useless as you will only be able to run your games for around 30hours a month on your PC and an hour or three on your iPad/Smartphone/3G equipped doodad.